Accounting and Accountancy Measures the Financial Status of Businesses and Corporations in Canada


How do I handle a Bonus for Accounting purposes in Canada?

A business bonus payable has to be physically paid out to be deductible for tax. Plus: Payroll remittances have to be made on time for that bonus. Further: A special bonus resolution has to be made and signed by the directors at the time of declaring the bonus and a second one, at the time of paying the bonus. An offset with Accounts Receivable can be considered as proof of payment if and only if...

(a) it is recorded in the second director resolution as the method of paying the net bonus after deductions; and

(b) the Accounts Receivable and bonus payable are for the same individual.

If these are not followed, CRA will very likely disallow the bonus expense. Also, in those circumstances, your accountant will not put that expense through on the tax return as it would not be a valid expense claim.

How do I handle working in remote locations for Accounting purposes in Canada?

You can write off meals, lodging and transportation for an employee 100% when...

The employee could not reasonably be expected to set up and maintain a self-contained domestic establishment because of the remoteness of the location and the distance from any established community.
You did not provide a self-contained domestic establishment for the employee.
The reasonable allowances were for a period of at least 36 hours when the employee had to be away from his or her principal place of residence because of his or her duties for the business; or the employee had to be at the remote work location.
CRA usually considers a work location to be remote when it is at least 80 kilometres or more from the nearest established community with a population of at least 1,000 people, where the definition of established community is if it has access to:

basic food store
basic clothing store, with merchandise in stock (not a mail-order outlet)
certain medical services
educational facilities